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Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.

Upcoming Events:

  1. 2H 2013 - Reactivation of mocetinostat program
  2. 3Q 2013 - IND-enabling studies with MG516; Phase 1 initiation 1H 2014
  3. Q4 2013 - Q1 2014 - Maximum tolerated dose establishment for MGCD265 and initiate expansion cohorts for Met-positive and Axl positive patients

Mirati Therapeutics (NASDAQ:MRTX), based in San Diego, CA is an early stage, oncology-focused company engaged in the development and commercialization of targeted therapies for patients with solid tumors, myelodysplastic syndromes (MDS), and lymphomas. Mirati has been in the news recently with its recent listing on the NASDAQ (July 15, 2013), revamped management team, and pipeline of targeted oncology agents.

Recent Changes

Before reincorporating in the US and trading on the NASDAQ, Mirati Therapeutics was formerly known as MethylGene. This move to the NASDAQ may help the Company in several ways, including an increased ability to secure financing from the larger US capital markets, improved liquidity of Mirati shares, and enhanced marketability of the shares. Mirati has also recently built a new and experienced management team, with a track record of success in oncology. Mirati appointed Dr. Charles Baum, MD, PhD as President and CEO, who has experience in leading the development of oncology assets at both Pfizer and Schering-Plough (now Merck), including the drugs Inlyta (axitinib), Xalkori (crizotinib), Sutent (sunitinib), and Temodar (temozolomide). The Company also appointed executives with previous senior leadership roles at Amylin Pharmaceuticals (now part of BMY), Bristol-Myers Squibb, and Pfizer (NYSE:PFE).

Targeted Oncology Assets - Mirati has several targeted oncology development programs:

  • MGCD265 is an orally available, small molecule, multi-tyrosine kinase inhibitor (TKI) targeting Met, Axl, and VEGFRs (vascular endothelial growth factors) currently in Phase 1/2 clinical trials for the treatment of patients with solid tumors.
  • Mocetinostat is a Phase 2/3-ready histone deacetylase (HDAC) inhibitor with demonstrated clinical activity in myelodysplastic syndromes, lymphomas, and various solid tumors.
  • MGCD516 is an orally available, small molecule, TKI targeting Met, Axl, VEGFRs, Eph, Ret and Trk. An IND filing for MGCD516 is expected in 2014.

Biomarker Strategy - Cancer is increasingly being sliced into smaller and smaller addressable segments as our knowledge about the underlying biology and pathogenesis increases. For example, breast cancer is now segmented into HER2+, HR+ (hormone receptor positive) disease, and TNBC (triple negative, those without these biomarkers). Depending on the patient profile, the treatment plan and prognosis varies considerably. Lung cancer has seen similar segmentation based on EGFR, Alk, etc. Consequently, viable biomarker strategies to differentiate and select patients who will respond to treatment are mandatory. Furthermore, companies must develop companion diagnostics and credible testing strategies to ensure that all patients are tested for the relevant biomarkers and appropriately selected for treatment. Companies pursuing these biologically-driven hypotheses with clinically validated biomarkers and the data to back it up will be able to both capture market share in earlier lines of treatment and obtain premium pricing. These strategies also have the potential to increase the chances of clinical trial success, since the likelihood of patients responding is higher. Mirati is actively focused on developing its candidates with its eye on the appropriate population subsets.

MGCD265 - MGCD265 is an orally available, small-molecule TKI designed for the treatment of advanced stage cancers, including non-small cell lung carcinoma (NSCLC), head and neck squamous cell carcinoma (HNSCC), gastroesophageal and renal cell cancer, hepatocellular carcinoma (HCC), and other solid tumors. MGCD265 was identified by Mirati in 2005, and is a potent and selective inhibitor of Met, Axl, and VEGFRs 1-3, key receptors involved in the pathogenesis of human cancers. The drug candidate is active against these targets at single-digit nanomolar concentrations. Furthermore, MGCD265 has shown little to no activity against the majority of a panel of over 400 other important receptors, reducing the potential for side effects and increasing the likelihood that MGCD265 will be effective in tumors driven by Met, VEGF or Axl.

In particular, Met is an extremely important target that genetically altered and acts as an oncogenic driver in subsets of non-small cell lung, renal, gastric and colon cancers, and is also an important mediator of resistance in multiple cancers including NSCLC, colorectal carcinoma, and HNSCC. Axl has been identified as a unique resistance mechanism to EGFR inhibitors such as Tarceva (erlotinib) through dysregulation of the receptor in NSCLC and HNSCC. Axl has also recently been implicated as a potential driver of disease in a subset of NSCLC patients via a translocation, providing Mirati with options for selecting patients who are most likely to respond in future clinical trials. While potency data is important, bioavailability is also an important concern for oral therapies. In studies to date, MGCD265 concentrations in blood have reached levels that are sufficient to demonstrate approximately 80% inhibition of the Met target using an ex vivo assay of Met phosphorylation in patient plasma samples.

MGCD265 is safe and generally well tolerated, according to previously completed clinical trials. Common side effects include diarrhea, fatigue, and nausea - typical for drugs of this class. Two current dose-finding Phase 1 trials are ongoing, and once the maximum tolerated dose (MTD) is reached, expansion cohorts will be enrolled with sub-populations of patients having Met-positive tumors and Axl-positive tumors. Mirati has created its own assay for selection of Axl-positive tumors based upon over-expression of the target and selection for Met will be conducted with the Ventana assay (Roche's tissue diagnostic company - also used by Roche for its MetMab). This asset is fully-owned by Mirati.

Mocetinostat (previously known as MGCD0103) - Mocetinostat is a histone deacetylase (HDAC) inhibitor with specificity for Class I HDACs. As part of Mirati's renewed focus on oncology, this asset has been moved off of the back burner and back into active development. 13 clinical trials involving 440 patients have been completed with mocetinostat in a variety of indications, including patients with myelodysplastic syndromes, lymphoma, and solid tumors. MDS are a group of hematological disorders that involve an ineffective production of healthy blood cells derived from the myeloid lineage in the bone marrow, and approximately 12,000 new cases are expected to be diagnosed in the US. Prognosis is poor, and 3-year relative survival rates stand at about 42%. Current drugs include Revlimid (lenalidomide from Celgene (NASDAQ:CELG)), Vidaza (azacytidine from Celgene, off-patent, but no generic has emerged), and Dacogen (decitabine from Eisai).

Mirati is evaluating opportunities for this program going forward, and is currently in discussions with the FDA to map out the most appropriate path. Current options include initiating clinical trials with mocetinostat in combination with Vidaza in patients with higher risk MDS. This program represents an opportunity to begin new trials at the Phase 2 or Phase 3 level, and targets a $1 billion MDS market with a significant need for novel and effective treatment options. Importantly, mocetinostat has received orphan drug designation from the FDA and EMA for the treatment of Hodgkin lymphoma and acute myeloid leukemia.

Positive Clinical Data - Data were presented at the 2013 American Society of Clinical Oncology (OTC:ASCO) meeting from a Phase 2 trial of mocetinostat in patients with MDS and AML. Patients received both mocetinostat and a currently approved drug for the treatment of MDS, Vidaza. The overall response rate (defined as complete response (CR) + complete response with incomplete blood count recovery (CRI) + hematological improvement (HI)) was 61% for the MDS group (n=28) and 32% for the AML group (n=38). The disease control rate, which includes patients with stable disease in addition to responders, was 93% for MDS patients and 84% for AML patients. This type of response is very impressive, especially for the patients with MDS, where the approved treatments have historical overall response rates of 15%-17%. Mirati could begin registration trials for mocetinostat as early as the first quarter of 2014. This asset is partnered with Taiho in certain Asian territories.

MGCD516 - Mirati's MGCD516 is a preclinical program that is undergoing IND-enabling studies with the possibility of commencing Phase 1 trials in solid tumor patients in the first half of 2014.

Similar to MGCD265, MGCD516 targets Met, VEGFRs, and Axl. However, it also inhibits members of the platelet-derived growth factor receptor (PDGFR) family, ephrin receptor (Eph) family, RET, and Trk. MGCD516 inhibits proliferation and cell motility in tumor cells exhibiting dysregulated tyrosine kinases in vitro and also inhibited angiogenesis. Oral administration of MGCD516 demonstrated robust cyto-reductive, antitumor activity in human tumor xenograft models. The candidate also exhibited high oral bioavailability in mice, rats, and dogs. This kinase inhibitor represents yet another biomarker focused opportunity for Mirati to exploit in the future. Based on recent data presented at 2013 ASCO, MGCD516 may be an appropriate candidate for the specific treatment of Eph-positive tumors in melanoma patients with resistance to BRAF inhibitors. RET translocations are also an emerging area of interest, and currently Cometriq (cabozantinib from Exelixis (NASDAQ:EXEL)), Caprelsa (vandetanib from AstraZeneca (NYSE:AZN)), and Iclusig (ponatinib from Ariad (NASDAQ:ARIA)) are targeting this as well. This asset is fully owned by Mirati.

Competitive Landscape and Risk Factors - Mirati is not the first oncology company to realize the potential for targeted oncology drugs. As previously mentioned, other companies, e.g., EXEL, ARIA, AZN are targeting RET translocations. Roche / Genentech and Amgen have Phase 3 trials underway with their Met pathway targeting mAbs, and it's fair to say these companies know a thing or two about commercializing biologics. However, Mirati's promising data and oral route of administration are potential points of differentiation. Also, antibody drug treatments from Seattle Genetics (NASDAQ:SGEN) and ImmunoGen (NASDAQ:IMGN) have the potential to take large shares of the heme/onc markets, and their efficacy benefits may overcome their less favorable IV administration profile.

Furthermore, even with a targeted therapy, new cancer treatments have been accused of only providing incremental improvements in overall survival and progression free survival at extremely high cost. Thus, even if the drug is approved, there are always issues around reimbursement. Furthermore, it is likely that Mirati's drugs may initially enter into later lines of treatment, thereby capturing patients who are refractory to other drugs. Unfortunately, many of these patients have poor prognoses and only spend a few months on drug treatment dramatically impacting sales. In addition, by this point in the treatment paradigm, many patients are ineligible for therapy due to diminished performance status. However, once the drug has been cleared by the FDA and EMA in these later lines of treatment, the process of moving up the ladder may begin. This strategy has been employed by many biotechs and leads to larger and larger pieces of the oncology pie.

Fundamentals and Financials - Mirati had approximately $30 million in cash and cash equivalents as of March 31, 2013. The Company raised $24 million in net proceeds from a private placement of stock in 2012, which contributed to its (relatively) strong cash position. With an annual estimated cash burn of approximately $20 - $24 million, the Company has enough resources to fully fund operations into the second quarter of 2014. However, expansion of development activities beyond MCGD265 would increase the Company's burn rate and capital requirements. Also, do not be surprised if the company takes advantage of the favorable biotech conditions in the next few months to raise additional capital. With approximately 10 million shares outstanding (and 13.2 million fully diluted), the market cap stands at ~ $90 million with an enterprise value of ~$60 million.

Conclusion and Future Directions - MRTX's clinical candidates are potentially best-in-class TKIs, and with a biomarker focused strategy, have significant potential to increase shareholder value in the coming years. While it is challenging to assign a specific value to such an early stage biotechnology firm, clinical success promises to dramatically increase the market cap and share price. Currently marketed oral TKIs, including Gleevec, Tarceva, Sutent, Nexavar, Sprycel, Tasigna, Iressa, have all seen commercial success. For MRTX, even the failure of one of the planned clinical trials does not spell disaster, given the large market that exists in different indications. Ultimately, Mirati has a new name, new management team, and a new focus, and I believe the glimpse of excellent efficacy data and tolerability profile bode well for the upcoming trials.

Source: Mirati Therapeutics: Revamped And Ready To Go With A Targeted Oncology Pipeline